Both Microsoft and IBM Top Estimates

Mister Softee's revenues may melt in 2000, though.
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Redmond, Wash., software giant

Microsoft

(MSFT) - Get Report

beat earnings estimates in the fourth quarter, as usual, but warned of a revenue slowdown for fiscal 2000.

Microsoft earned 40 cents a share in the quarter ended June 30 from $5.76 billion in revenue and net income of $2.2 billion. The company's 40 cents was 4 cents better than the 26-analyst

First Call

forecast of 36 cents and 60% higher than the year-ago 25 cents. For the full year, Mister Softee earned $1.42, or net income of $7.79 billion, up from 84 cents a share in fiscal 1998.

CFO Greg Maffei attributed the record fiscal-year revenue and income to strong consumer demand for Windows and Office products as well as accelerating demand for Windows NT Server, SQL Server and Exchange Server. However, he noted that "in fiscal 2000, our revenue growth rates will decline due to slowing PC demand, uncertainty surrounding Y2K and uncertain global economic conditions, and we will not see further margin expansion."

Maffei, generally conservative when providing earnings guidance, told more than 10,000 listeners on a conference call the more subdued outlook was partly based on expectations of a continued slowdown in PC demand in Europe and Japan. In the U.S., he said PC sales continued to look strong but he cautioned that Microsoft was not sure demand would be sustainable due to Y2K.

Because of an expected slowdown in fiscal 2000 revenue growth into the "high teens" from 29% in the year just ended and a charge linked to a different calculation for employee stock options, Maffei encouraged analysts to keep estimates for fiscal 2000 unchanged. He said a change in employee stock options would reduce fiscal 2000 earnings by 3 cents, spread out over the course of the year. According to First Call, analysts forecast Microsoft to earn $1.53 in 2000.

For the first quarter, he expected Microsoft to see a "normal, seasonal" sequential revenue decline but a year-over-year increase of about 20%.

Maffei said Microsoft had $200 million worth of unearned revenue linked to

coupons for free Office 2000 upgrades to be recognized over the next two quarters. At the end of the March quarter, he said the company had $400 million in unearned revenue linked to coupons, recognized $300 million of that in the June quarter while adding $100 million.

Maffei also told analysts and investors that Microsoft was considering a tracking stock for its Internet properties but as of yet had "no immediate plans" to make an announcement. Microsoft is planning an analyst day on Thursday.

The stock fell to 97 9/16 in after-hours trading from a close of 98 3/8.

--

Medora Lee

The other big earnings report tonight came from

IBM

(IBM) - Get Report

. Big Blue posted second-quarter earnings of 91 cents a share, topping both the 21-analyst prediction of 88 cents and the year-ago 75 cents. The company said quarter revenue grew 16% to $21.9 billion.

In other postclose news (earnings estimates from First Call; earnings reported on a diluted basis unless otherwise specified):

Earnings/revenue reports and previews

BancWest

(BWE)

said it will take a $6.9 million third-quarter charge to consolidate its mainland Hawaii data processing operations at its Honolulu operations center.

CBRL

(CBRL) - Get Report

said it sees fourth-quarter earnings of 21 cents to 25 cents a share due to poor

Cracker Barrel

same-store sales, higher costs from increased management staffing levels at these stores and pressure on store-level margins. The 17-analyst estimate called for 37 cents vs. the year-ago 56 cents.

Citation

(CAST)

posted third-quarter earnings of 26 cents a share, including special items. The two-analyst forecast called for operating earnings of 28 cents vs. the year-ago 54 cents.

Merisel

(MSEL)

said it expects to report a second-quarter loss of 14 cents to 17 cents a share, excluding a $9 million insurance reimbursement. The three-analyst view called for an operating loss of a penny vs. year-ago earnings of 6 cents.

Zomax

(ZOMX)

reported second-quarter earnings of 60 cents a share, 5 cents higher than the five-analyst estimate and significantly ahead of the year-ago 15 cents The company also set a 2-for-1 stock split.

The

New York Stock Exchange

said its second-quarter net income came in at $30.5 million, which is unchanged from a year earlier.

In other earnings news:

Mergers, acquisitions and joint ventures

EG&G

(EGG)

agreed to sell its

Technical Services

division to the

Carlyle Group

for $250 million in cash, saying the unit isn't a good fit with the company's long-term focuses in life sciences, analytical instruments, electronics and aerospace.

GM Hughes Electronics'

(GMH)

DirecTV

unit made a $15 million equity investment in privately held

Wink Communications

. Wink's technology allows broadcasters and advertisers to embed data and simple graphics into broadcasts.

Olsten

(OLS)

signed a final $61 million settlement of lawsuits brought by the federal government, charging the company with defrauding the

Medicare

program.

Offerings and stock actions

J.P. Morgan

priced

Genentech's

(DNA:NYSE) 20 million-share IPO top-range at $97. The price range for the biotech company's first offering was raised to $88 to $98 from $85 to $95. The company, whose parent is

Roche Holding

, develops, manufactures and markets pharmaceuticals.

In other new issues:

  • Goldman Sachs priced Convergent Communications' (CONV:Nasdaq) 8.4 million-share offering top-range at $15. The company is a data and voice communications services provider. The price range for the offering was raised to $13 to $15 from $11 to $13.
  • Credit Suisse First Boston priced Gadzoox Network's (ZOOX:Nasdaq) 3.5 million-share offering above-range at $21. The company makes products that connect computer systems to data storage services. The price range for its offering was raised to $18 to $20 from $9 to $11.
  • Lehman Brothers priced Talk City's (TCTY:Nasdaq) 5 million-share IPO top-range at $12. The company is an online communities provider. The price range for its offering was raised to $10 to $12 from $8 to $10.

Motorola

(MOT)

said it will sell 2.8 million shares of

Nextel Communications

(NXTL)

during the third quarter. After the transaction, Motorola will own 19% of Nextel's 56 million outstanding shares.

Miscellany

A federal court temporarily barred

Eli Lilly

(LLY) - Get Report

from making promotional claims that its osteoporosis drug

Evista

has been shown to reduce the risk of breast cancer, its British rival

AstraZeneca

said.

St. Jude

(STJ)

said it advised doctors that premature battery depletion can occur in a "very small" number of its

Trilogy

pacemakers.